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The relationship between internationalization and manufacturing firms’ performance in Vietnam: The moderating effect of organizational slacks

By Huynh Thi Ngoc Hien (VNP 19)

Supervisor: Dr. Nguyen Van Phuong

Abstract

As the world moves toward global expansion, the global enterprises in both developed and developing countries have been becoming the main drivers of this process. Although there are many empirical studies on the actual relationship between internationalization and performance, the question is still relatively ambiguous due to controversial findings. Thus, this study uses a panel sample of 45491 unlisted Vietnam manufacturing enterprises during the six-year period (2007-2012) surveyed by GSO (General Statistic Office) to investigate the impact of internationalization degree on firm performance. It is widely admitted that the Vietnamese economy is mainly based on the credit market which is relatively frail and frequently affected by the changes in the local fiscal and monetary policies. Under these contexts, firm’ abundant slack resource is a miracle tool to enable the successful implementation of internationalization strategies. After conducting the fixed effect analysis, the study finds a significant S-shaped relationship between degree of internationalization (DOI) and firm performance. Specifically, the performance firstly decrease then increase and decline in the later stage. Furthermore, the regression depicts that the higher level of slacks on both kind of high-discretion and low-discretion is, the better the firm performs. Especially, the sufficient slacks contribute to enhance the relationship between internationalization and performance.

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